In this episode of the case files, I discuss the Texas case of Ramirez vs. Rodriguez, et. al., a case that involves four sibling co-trustees and the attempt by three of them to remove their trouble-making brother because of his hostile actions. Is being a royal pain in the derriere enough to remove a trustee from office.
This case reminds me of a scene from an episode of The Marvelous Mrs. Maisel, an Amazon original series that I have featured in the video.
Both this case and the scene from the series drive home the point that sometimes mixing family and money can be an explosive combination.
A recent Fox Business News report that otherwise does an admirable job of discussing the challenges faced by families with aging parents nevertheless steps over the line with the title of its report. While likely unintentional, the title of the story – “Aging parents are the new ‘children’ | Fox Business – is demeaning to older adults who are already fighting to preserve their dignity and overcome ageist attitudes towards them.
Referring to aging parents as “children” instead of simply older adults, or adults with limitations, reinforces negative stereotypes about older people that have been shown to contribute to their poor health and more rapid decline.
A 2015 article in the Journal of Geriatrics titled, Stereotypes of Aging: Their Effects on the Health of Older Adults, discusses several studies that affirm the health benefits of healthy age stereotypes (messaging) as well as the harmful effects of negative stereotypes. For example, subjects primed with more negative stereotypes such as sick, needy, dependent, burdensome, and childlike, were more likely to suffer from memory loss, hypertension, coronary disease, and depression, than subjects primed with positive messaging such as wise, valuable, experienced. Those who were exposed to negative stereotypes at home died on average seven years before those who received positive reinforcement.
Nearly all of the world’s wisdom traditions include honoring the old as a core tenant of belief and practice. Negative stereotypes and demeaning labels such as being called a child does little to bring honor to those whose guidance, advice, comfort, affirmation, and support we earnestly sought for years.
Otherwise, the report contains a lot of useful tips for families.
The Law Firm of Faegre Drinker Biddle & Reath LLP, recently published the trial court results of a case involving a charge of Undue Influence brought by the two adult children of William Moriarty.
Mr. Moriarty was widowed in April 2016. William had been diagnosed with depression, anxiety and congestive heart failure following Doreen’s death. Eve, who had been married three times previously and had met William while Doreen was alive, began dating him within weeks after Doreen’s death.
Afterward, Cathy and Paula noticed a marked change in their relationship with their father, though they did not learn of his and Eve’s relationship until soon before they were married. Eve and William married about seven months after Doreen’s death, and neither Cathy nor Paula were invited to, or attended, the wedding.
From firing William’s caregiver to procuring a new will for him through her own lawyer, Eve also was named as joint owner of a new, large home purchase shortly after their marriage, as well as of a new $60,000 Lexus.
Relying on an expert witness, the court determined that William’s physical and psychological impairments made him vulnerable to undue influence.
The trial court was convinced that Eve exercised undue influence over William due to multiple facts presented at trial, including the dramatic shift in his estate plan only one month before his death and Eve’s involvement in procuring his will and surrendering his life insurance policy. The trial court was less than impressed with Eve’s demeanor in court, noting her “flat affect during emotional testimony,” which left the court “with no confidence that Eve married William because she loved him and with the conclusion that Eve planned to take all of William’s money all along.”
Ultimately, the trial court declared that the purported will was invalid due to William’s lack of capacity and Eve’s undue influence over him, and it ordered that William’s estate be distributed as if he had died intestate.
The court also ordered Eve to transfer title of bank accounts, the house and the car — all of which she otherwise would have received as a joint owner — to William’s estate.
If you manage your parents’ investment accounts because they are not capable, you may have watched helplessly the past several weeks as their stocks fell by thirty percent or more from the S&P 500 index highs in mid-February to its low point so far on March 23rd.
They say blood is thicker than water, but money is thicker than blood in my experience, so if you are managing your parents’ accounts, you may have concerns that either they or some extended family members may feel you should have done something to prevent the declines in your parents’ accounts.
In this video, I offer three tips to lessen your exposure to liability.
In the video below, Robert Powell, editor of The Street’s Retirement Daily, and Angie O’Leary, head of wealth management with RBC Wealth Management, talked about the need to plan ahead for the possibility of dementia and the type of plans to put in place.
According to O’Leary, the plan should include having key legal documents – a power of attorney, healthcare directive, and will – in place as well as having assets properly titled and beneficiary designations current. Consider too, she said, the benefits of a trust and professional executor services, as well as supplemental insurance, including long-term care options.
O’Leary also noted the need to understand early warning signs and, after a diagnosis, acting swiftly to protect the family from financial missteps, abuse and liability.
Having a plan is essential, and key legal documents—a power of attorney, healthcare directive, and will—should be in place.
If you are struggling through the financial transitions of aging, Wealth and Honor is here to provide you with resources to help you and your family through it.
In this episode of The Case Files, I profile a 2010 Texas case involving a daughter’s misappropriation of her deceased father’s trust funds as well as her aging mother’s personal assets. The characters from the 1960s sitcom Green Acres provide a little humor to an otherwise serious situation. Enjoy and learn!
With the new year, I’ve entered my 36th year in the financial services industry. Just writing this fact feels strange. I’ve never characterized myself as a veteran of the industry, feeling instead that I’ve just hit my stride. The years however tell me differently and it’s easy to understand how senior professionals can feel marginalized. I chose a doctor several years my junior so that as I aged, he’d still be in practice. Understandably now, clients want to know who my back up is “just in case.”
The financial planning industry has done an admiral job of preparing people for two pivotal moments: Retirement – that magic age when one stops earning a paycheck, travels the world, plays golf every day, and enjoys a life of leisure; and Death – the final moment beyond which our assets and legacy are left to our heirs. It has done a poor job of equipping advisors to address the financial planning issues of the period in between. Sure, advisors sell long term care insurance to forty and fifty-somethings for this period, and others sell annuities to seniors skittish about the financial markets, but these are product solutions aimed at the senior market, not financial planning discussions. In a similar way, a walker solves an issue with balance and prevents falls, but a walker is not a comprehensive plan for health and wellness throughout life.
While there are several common financial planning issues for every age demographic, there are also many unique financial planning needs of the senior market.
Common Financial Planning Issues
Ensuring adequate cash flow throughout life.
Evaluating and addressing risks to financial independence.
Determining the financial impact of major life events.
Minimizing income tax.
Allocating investment resources to accomplish current and future goals.
Defining a plan for the distribution of accumulated assets at death.
Financial Issues Unique to Seniors
Plan for downsizing or home modification
Relocation plan if distant from family
Plan for continued social engagement
Family business succession
Identity and fraud protection
Annual Medicare elections
Developing a dependency plan to include
Living arrangements
Persons in charge of financial decisions
Persons in charge of healthcare decisions
Transportation needs
It’s tempting to ask how a plan for continued social engagement is a financial planning issue. With social isolation a major contributor to poor health among seniors[1], and healthcare costs absorbing a significant portion of a senior’s resources, a plan for social engagement as we age should be an integral part of the financial planning conversation with seniors.
Annual Medicare elections are another example of an often-confusing labyrinth of decisions that can have significant financial impact for years.
Identity theft and elder financial fraud are estimated to cost seniors between $3 and $30 Billion a year[2], and nearly everyone I know over age 70 has been targeted. A plan that includes identity theft protection as well as vulnerabilities to undue influence inside of familial relationships needs to be included.
Plans for living arrangements, whether aging in place, or facility care, should be discussed long before the actual need arises. Just as saving for retirement doesn’t begin at age 65, neither should plans for where someone lives out the remainder of their life be delayed until the 11th hour.
Family meetings to discuss an aging client’s dependency plan should be also be held long before a dependency event occurs. It helps assure family members that a plan is in place, informs them as to who-does-what-when, and when done early enough and under the direction of the aging client, preserves his or her seat of honor at the head of the table.
Family Business Succession has been a central component of financial and estate planning for years and is the least neglected area of financial planning for seniors among those who own a multi-generational family enterprise. Still, nearly 60% of the small business owners surveyed by Wilmington Trust, do not have a succession plan in place[3].
In conclusion, financial planning does not end at retirement. As one client reminded me years ago, “retirement is just another word for thirty years of unemployment.” It doesn’t look the same for all seniors but when practiced with integrity, it can be extremely beneficial to the entire family, and rewarding for the financial planner who chooses to serve this market.
[1] National Institute on Aging. (2020). Social isolation, loneliness in older people pose health risks. [online] Available at: https://www.nia.nih.gov/news/social-isolation-loneliness-older-people-pose-health-risks [Accessed 7 Jan. 2020].
[2] Consumer Reports. (2020). Financial Elder Abuse Costs $3 Billion a Year. Or Is It $36 Billion?. [online] Available at: https://www.consumerreports.org/cro/consumer-protection/financial-elder-abuse-costs–3-billion—–or-is-it–30-billion- [Accessed 7 Jan. 2020].
Kerri, Julie and Mike Kasem have asked a judge to dismiss their wrongful death lawsuit against their stepmother, Jean Kasem, 64, as part of a settlement after a four-year legal feud.
While these cases make the headlines due to the celebrity status of the parties and the amount of money involved, dramas like this for much smaller amounts happen all too frequently. Death and money can bring out the worst of family dysfunction.
How can families prevent this kind of outcome? There is no simple answer, and if the dynamics among the family are already toxic, then it’s even more important that families have a solid, written plan in place before incapacity strikes. It may not have prevented the accusations of wrongful death between the parties, but it could have created a structure of care and wealth distribution that could have neutralized or minimized any incentive for the parties to commit a wrongful death offense.
Unfortunately, no estate plan can prevent an immoral or illegal act; nor can it instill character in the lives of others.
A recent article written by Joe Pinkster for the online magazine, The Atlantic, discusses the issue of inheritance, and specifically whether there exists a magic number that represents an inheritance that is too large[1]. This question has become relevant for many reasons, one being that some wealthy parents are concerned that after a certain point, money passed down will be damaging to the next generation, removing the incentive to be productive contributors to society.
This is not a new question. King Solomon in the Old Testament, clearly pondered the same question during a particularly dark time in his life:
I hated all the things I had toiled for under the sun, because I must leave them to the one who comes after me. And who knows whether that person will be wise or foolish? Yet they will have control over all the fruit of my toil into which I have poured my effort and skill under the sun. This too is meaningless. So my heart began to despair over all my toilsome labor under the sun. For a person may labor with wisdom, knowledge and skill, and then they must leave all they own to another who has not toiled for it. This too is meaningless and a great misfortune.
ECCLESIASTES 2:18-21 NIV
The question is, should this be a concern of most families given the fact that most people won’t receive vast fortunes from their parents? In fact, research by the Federal Reserve indicates that 85% of inheritances between 1995 and 2016 were less than $250,000 and most were less than $50,000.[2]
From my personal life and professional experience, I have formed this observation: sudden money will bring out a recipient’s best or worst financial behaviors to the degree that they have been prepared for it, regardless of the amount. This is not to say that mistakes with inherited money are necessarily a bad thing. Speaking for myself, the lessons that I have learned through failure are some of my more life-changing ones, and I wouldn’t trade the failures for successes without the lessons.
For those inheriting less than say, $50,000 – the impact of learning through failure isn’t as financially devastating as burning through $5 Million. Older parents who are concerned about their adult child’s ability to manage up to perhaps a $150,000 inheritance may want to consider these less elaborate (and less costly) options than leaving their assets in trusts or other complex arrangements:
Leave it to them unfettered and simply let them do their best with it and hopefully learn a valuable lesson in the process. Losing $50,000 for buying an RV rather than saving it for retirement may be a painful lesson, but one they can likely recover from.
Consider leaving the money to a grandchild’s education account such as a 529 Plan, instead of outright to the adult child-parent.
If the inheritance is paid through an insurance policy, discuss the policy’s settlement options (how the death benefits are paid to a beneficiary) with your insurance agent. One option may be the payment of a monthly amount spread out over a number of years which cannot be altered by the beneficiary.
One exception to these simpler options is if the adult child has a physical or mental disability and receives government assistance such as Medicaid. In such case, working with a Medicaid attorney to create what is known as a Special Needs Trust, may be necessary to preserve these benefits, but this has little to do with the behavioral issues that concerned Solomon or many families today.
What about the small percentage of significantly larger inheritances? Should families be concerned about how the sudden impact of substantial financial windfalls will affect those who inherit? My response is a resounding YES not only to preserve the wealth left to these beneficiaries (The Sudden Money Institute, a think tank and financial consultancy specializing in planning for life transitions such as inheritances, claims that 90% of inherited wealth disappears by the third generation), but also because inheriting sudden wealth can be difficult emotionally as well.[3]
For over two centuries, wealthy Americans have used trusts and other elaborate means to preserve family wealth or family-owned business enterprises, control heirs’ behavior from the grave, or provide financial tutelage until heirs demonstrate the ability to responsibly handle their wealth. Trustees – those who control the purse-strings for these wealthy heirs – are required by law to act in the best interest of these heirs. A good trustee will assume the roles of surrogate and mentor with the beneficiaries under his care and like a good parent, will sometimes allow the beneficiary to fail small in order to learn valuable lessons for when the beneficiary may have responsibility for a much larger fortune later on.
However, no estate plan can instill character regardless of the sophistication of the plan. A healthy work ethic, compassion, integrity, loyalty, fidelity… these are ultimately behavioral choices we all must make, no matter how wealthy we may become. Perhaps this was Solomon’s true lament.
[1] Pinsker, J. (2019). How Much Inheritance Is Too Much? [online] The Atlantic. Available at: https://www.theatlantic.com/family/archive/2019/10/big-inheritances-how-much-to-leave/600703/ [Accessed 29 Oct. 2019].
In yet another case of family member trustees gone wrong, Former St George Illawarra Dragons star Mark Gasnier has accused his brother of taking funds from a family trust as part of a long-running dispute.
Mark Gasnier and his brother Dean, are co-trustees of a family trust apparently established by their parents. According to the complaint, Dean, without the knowledge of Mark, made a number of withdrawals from the family trust and even went as far as faking the signatures of his parents John Gasnier and Janene Gasnier on financial documents including tax returns. The case is headed to the New South Wales Supreme Court.
Appointing an institutional corporate trustee might have prevented the dispute since corporate trustees typically include layers of checks and balances designed to prevent unauthorized withdrawals from occurring. If families still want someone within or close to the family involved, then appointing them as co-trustee with limited authority is a possible solution.
Perhaps this sibling rivalry should have been left on the Rugby pitch!
